As millions of Americans confront rising health insurance costs, plans promoted during the Trump administration are gaining attention due to their lower premiums. However, many of these plans, known as short-term health insurance, may leave consumers with substantial out-of-pocket expenses when they require medical care.
Robert Hays, a salesman from Arkansas, along with Essie Nath, a retired cafeteria worker from Wyoming, and Martin Liz, a chef from Key West, Florida, all enrolled in these short-term plans, believing they had purchased traditional health insurance. After requiring surgeries, they discovered the harsh reality of their cheaper policies. Hays is now facing bills of approximately $116,000 for neck surgery, while Nath incurred $82,000 in heart failure treatment and Liz has over $100,000 in costs for knee replacement surgery.
“These policies are a horrible idea,” said Ken Swindle, an attorney representing Hays. “People think they’re getting comprehensive medical coverage, but they’re not, and they often don’t realize that until it’s too late.” The situation is exacerbated as enhanced government subsidies for Affordable Care Act (ACA) plans are set to expire this year, prompting many to consider these short-term alternatives.
Unlike traditional insurance, short-term plans are not required to cover preexisting conditions or essential services such as maternity care and mental health. According to the Kaiser Family Foundation (KFF), five states have banned these policies due to their inadequate coverage, and major insurers have expressed concern that consumers may confuse them with comprehensive plans. The Biden administration has characterized them as “junk” plans.
While these short-term plans can cost significantly less—sometimes half the price of ACA-compliant plans—consumers must be cautious. For instance, a 40-year-old nonsmoker in Florida might pay around $500 per month for a standard ACA plan, while a short-term plan could be available for $320.
Insurance agents are witnessing an influx of inquiries from individuals seeking lower-cost options. “Costs continue to go up, leaving individuals, families, and businesses scrambling to find and keep the coverage they need,” said Kelly Loussedes, vice president of the National Association of Benefits and Insurance Professionals (NABIP). “It’s essential that consumers understand these plans are not comprehensive coverage.”
While some insurance professionals caution against short-term plans, they acknowledge their potential benefits for specific groups. Joshua Brooker, an insurance consultant in Pennsylvania, noted that these plans could serve those who are healthy or transitioning between jobs.
Short-term insurance plans were significantly expanded in 2018 under the Trump administration, which viewed them as a viable alternative to ACA options. Health Secretary Alex Azar stated, “These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
Concerns about the implications of these plans were voiced by some insurance companies. Executives at Cigna and Aetna raised alarms regarding the potential for consumers to be misled about the adequacy of coverage. In contrast, UnitedHealth Group supported the regulatory changes, advocating for quicker approval of the expanded policies.
Despite the controversy surrounding short-term plans, enrollment figures have surged. A 2020 study indicated that around 3 million consumers had opted for these policies following the regulatory changes. However, many experienced issues when attempting to access benefits. Reports indicated that brokers incentivized by larger bonuses were using misleading marketing tactics to sell these plans, leaving consumers with a “false sense of security.”
In 2023, the Biden administration reinstated the previous limit of four months for short-term plans. Yet, the Trump administration has signaled a return to its prior definitions and is not prioritizing the enforcement of the new regulations. The Centers for Medicare and Medicaid Services commented that these plans can provide “stopgap coverage solutions” that are more affordable than ACA plans.
As more consumers consider short-term health insurance due to lower premiums, the experiences of individuals like Hays, Nath, and Liz serve as cautionary tales. Hays, who enrolled in a short-term policy in May 2023, faced a denial of coverage for his surgery due to claims of a preexisting condition. Despite receiving pre-authorization, his insurance provider asserted that his neck issues were not covered, leading him to file a lawsuit for reimbursement.
Nath encountered a similar situation when her application for a third short-term policy was rejected due to a preexisting condition, leaving her without coverage when she suffered heart failure. Liz’s experience was no different; after obtaining a short-term policy for more than three years, his knee surgery claims were denied under accusations of “fraud or intentional misrepresentation.”
As the landscape of health insurance continues to shift, consumers are urged to thoroughly evaluate their options. With rising costs and evolving regulations, understanding the limitations and risks of short-term plans is crucial for making informed health insurance choices.
